Page 2210 - Week 08 - Wednesday, 6 June 1990
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Question resolved in the negative.
MR COLLAERY (Attorney-General): I was not going to speak on this matter, but I was attracted to the idea when I heard the Leader of the Opposition say or imply that somehow the Government had gone easy on business.
Mr Follett: I think I said it.
MR COLLAERY: Well, the Leader of the Opposition interjects to say that she said that we had gone easy on business in this matter. Perhaps we should put the record straight on this matter. We have never, to date, had a taxing regime for the sale of businesses in the Territory. Conveyancing solicitors working in this Territory have long noticed the anomalous situation where, if they convey a business in Queanbeyan or Yass, the yellow contract is sent to Sydney for stamping and duty is paid, but in the Territory businesses have changed hands here largely, and subject to some company taxing situations, without tax. So this is a new territory for our stamp duties area.
Given the parlous situation of a lot of small businesses at the moment in the Territory, I believe it is prudent of the Government to consider, firstly, the possible impact of a whole new regime; and, secondly, to look not so much at the avoidance mechanisms but at the manner in which the incidence of tax has been shifted by smart lawyers over the years in jurisdictions where these liabilities accrue. I am referring to people who, when about to sell an unincorporated business or partnership, incorporate it so that it is taxed at the 1.5 per cent rate, for example, here, instead of at 5.5 per cent, and so on.
I am not implying in any way in this speech that people do those things in the ACT - it has not been necessary to do it - but I would suggest to right-thinking people in the Territory that for us to use the one-stop-shop taxing system proposed by the Leader of the Opposition would give more business to lawyers and would certainly lead to more incorporations of small businesses as people move to try to lessen the incidence of tax.
So I say to the Leader of the Opposition, through you, Mr Deputy Speaker, that that thought has been quite properly in the minds of the people who instructed on the drawing of this Act. We have now a regime where, when a business sale contract is provided to the commissioner for assessment, the commissioner looks at the real estate. So if the small business person has the unlikely prospect of owning his or her lease in the Territory - not many of them do - that is assessed at the conveyancing valuation rate, and then there will be another square in which to return the assets of the business. Many of us know the very vexed issue that at that juncture goodwill is taxed. Many small business
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